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Ottawa finds no issues with Restaurant Brands’ takeover of Tim Hortons despite franchisee complaints

A Tim Hortons coffee shop in downtown Toronto.

Fred Lum/Globe and Mail

Ottawa has decided that Restaurant Brands International Inc. has honoured the commitments it made to gain federal approval to acquire Tim Hortons despite complaints from dissident franchisees that company infractions have led to safety and other concerns.

The unhappy franchisees had asked Navdeep Bains, Minister of Innovation, Science and Economic Development, to look into alleged breaches of the promises that Tim Hortons’s new foreign owner made in 2014 to get approval for the takeover.

Karl Sasseville, a spokesman for Mr. Bains, said this week the minister is satisfied there are “currently no compliance issues under the Investment Canada Act. As with all cases, monitoring of these commitments has been and will remain ongoing. ...

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“We encourage both parties to continue working on their relationship to constructively resolve their commercial dispute. Tim Hortons is an iconic Canadian brand and an important part of so many Canadian communities.”

The Brazilian private-equity firm 3G Capital took over Tim Hortons in late 2014 and merged it with its Burger King chain to create RBI. It moved quickly to put the 3G stamp of heavy cost-cutting on Tim Hortons, prompting pushback from some franchisees.

Less than a month after The Globe and Mail published an in-depth article in early 2017 about the accelerating strains at Tim Hortons, the dissident restaurant owners formed the Great White North Franchisee Association to represent them. RBI has refused to acknowledge the association, instead stepping up communications with the franchisee advisory board, which the dissidents say is a rubber stamp for management.

In December, RBI named Alex Macedo, a former executive of Burger King, as president of Tim Hortons; he is trying to make amends with franchisees through the advisory board.

The 2014 undertakings were made to the federal Conservative government and the details are confidential, Mr. Sasseville noted.

The association said on Thursday that Mr. Bains’s office has not contacted it about the results of its investigation.

“Without a clear and transparent process, we cannot comment in any meaningful manner to any statements made by the ministry or the minister,” the association’s board of directors said in a statement to The Globe.

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“The GWNFA has made an ongoing commitment to its members, which represent well over 50% of Tim Hortons franchisees, to try to bring about a meaningful dialogue with RBI, to no avail.”

RBI spokeswoman Devinder Lamsar said the company has fulfilled its undertakings, which include continuing to invest in this country, such as pouring $100-million into building two new distribution centres and expanding another one.

“A small group of franchisees approached the government with concerns that we had not upheld our Investment Canada commitments,” she said. “The federal department responsible undertook a period of due diligence and they informed us late last week that they are satisfied that we have fulfilled our undertakings – and we will continue to do so.”

She said Mr. Macedo is “working hard to unify the Tim Hortons franchisee family so these types of distractions don’t take our attention away from improving our restaurants, menus and brand marketing.”

The 2014 commitments included pledges not to increase franchisee rents and royalties for five years and to maintain staff support for franchisees.

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